Security Systems News - security providershttp://www.securitysystemsnews.com/taxonomy/term/6097
enMonth-to-month contracts: Boon or bane for alarm industry?http://www.securitysystemsnews.com/article/month-month-contracts-boon-or-bane-alarm-industry
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<div class="field-item even">SSN readers divided on the risks and benefits</div>
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<div class="field-item even" property="schema:datePublished dc:date"><span class="date-display-single" property="schema:datePublished dc:date" datatype="xsd:dateTime" content="2013-04-17T00:00:00-04:00">04/17/2013</span></div>
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<div class="field-item even" rel="schema:author dc:creator">Rich Miller</div>
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<div class="field-item even" property="schema:articleBody content:encoded"> <p>YARMOUTH, Maine—It’s a model that was discarded by big players in the alarm industry long ago: Pay-as-you-go monitoring, with customers covering the cost of equipment and installation upfront. But in a world where flexibility is increasingly driving purchasing decisions, is it time to turn back the clock? Have consumers had enough of long-term contracts?</p>
<p>SecureWatch 24, a New York-based company specializing in property surveillance and facilities management, is betting on it. SW 24 entered the residential intrusion market last fall by offering month-to-month contracts, calling the approach “a game-changer.” To find out if the industry agreed, SSN asked readers about it in the May News Poll.</p>
<p>The responses were largely divided along the lines of company size. For many smaller service providers, month-to-month is the way they’ve always done business.</p>
<p>“Game-changer? Perhaps among mass marketers,” one reader wrote. “Small electronic security providers have been doing this forever.”</p>
<p>“Been doing this for years,” another reader said. “This is how we compete with the big boys.”</p>
<p>Among the respondents who use long-term contracts, more than half (51 percent) said consumers would agree to pay more upfront as long as they received good service. Thirty-eight percent of respondents disagreed, saying their customers would balk at the larger initial investment required with the month-to-month approach.</p>
<p>“We offer both options to customers, but they overwhelmingly choose the lower upfront costs,” a reader said. “I see a smaller market for customers who have an extra $1,000 to $2,000 set aside to spend on a security system.”</p>
<p>“Some will be willing to pay the larger [upfront] fees necessary for month-to-month monitoring. The great majority will not, but it’s hard to see what the downside would be as long as a company is well capitalized,” another respondent wrote.</p>
<p>Nearly a dozen readers commented on the need for long-term contracts because of the financial stability they provide.</p>
<p>“A key determination of the value of your company in this business is your RMR base, along with the average length of your contracts,” a reader said. “If a contract is month-to-month, there is little value in the RMR of that contract, and in turn your company.”</p>
<p>“There is no value in month-to-month contracts in the eyes of lenders,” wrote another respondent. “Stub your toe a bit and you are in unrecoverable debt with no long-term agreements to count on or show as collateral. ... The success of this entire industry has always been longer-term contracts.”</p>
<p>Many others pointed to service as the most important factor for retaining customers and increasing revenue, regardless of whether the contract was monthly or long-term.</p>
<p>“Even though we have auto-renewing annual contracts, we don’t hold customers’ feet to the fire and never charge a [disconnect] fee,” a reader wrote. “Personally, if a customer is unhappy enough to want to leave, I think they deserve an apology. ... We should try to salvage the relationship, but they should be allowed to go.”</p> </div>
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<span property="dc:title" content="Month-to-month contracts: Boon or bane for alarm industry?" class="rdf-meta element-hidden"></span>Wed, 17 Apr 2013 15:13:00 +0000Leif Kothe16317 at http://www.securitysystemsnews.comhttp://www.securitysystemsnews.com/article/month-month-contracts-boon-or-bane-alarm-industry#comments